Admission Discounts Negatively Impact Long-Term Visitation (DATA)

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Every time a cultural organization discounts its admission price, an informal education fairy loses its wings.

Okay. IMPACTS does not have data to support that fantastic claim. But data provide insight into how offering discounts on admission price impacts visitor satisfaction and the likelihood of gaining positive endorsement…and the findings aren’t encouraging.

(Pause. I am continuing with Know Your Own Bone as usual, but before we go further, I’d like to point you toward some resources to help our friends who are facing Hurricane Harvey right now. A big thanks to those protecting people – and also our cultural treasures – during this difficult time.)

At first blush, discounting may seem like a good idea for some organizations. “We’ll increase visitation,” some leaders might say. As it turns out, this theory is misguided. Discounting costs more than the loss of admission revenue resulting from the discount. Discounting creates a costly and unsustainable cycle that visitor-serving organizations often (willingly!) overlook for the sake of a short-term, quick hit attendance bump. In fact, many organizations measure the success of initiatives in timelines that highlight short-term successes and make uncovering true visitor behaviors and long-term implications difficult.

Data suggest that discounting negatively influences the very two factors that drive visitation in the long-term: Satisfaction and reputation.

The data below were collected from a recent price analysis completed by IMPACTS in May 2017 of nine US visitor-serving organizations. The sample size of this study was 3,148 US adults.

Adult general admission prices for the nine organizations contemplated in the analysis ranged from $20 to $49.95. Moreover, the organizations included a range of cultural, visitor-serving entities such as museums, aquariums, and zoos in different regions of the United States. (A few quick notes: Only organizations with an admission basis were contemplated in the analysis. This analysis also excludes members. In other words, members were not included in the “100% discount (free)” category indicated in the charts below.)

Here’s what we found…

Discounting decreases one’s likelihood of endorsing that organization

One might think that visiting on a discount would increase the likelihood of visitors saying great things about the experience! After all, these folks got to attend on a special discount! Unfortunately, that’s not the case. Visitors who attended with a full discount indicated that they are 11% less likely to recommend visiting the same organization to a friend or family member.

People value what they pay for. Before you shoot the messenger about this news, remember that it’s a popular and well-established tenent of pricing psychology – and it’s not new.

Entities that discount their admission price devalue their own onsite experience, so visitors take their cue and devalue the experience right back. Considering this, it makes sense that people who get in on a discount are less likely to recommend visiting an organization at its full price point to a friend or family member.

Hey, you started this devaluing cycle…

The kicker: Losing earned endorsement is a really big deal. Earned endorsement plays a major role in driving visitation to cultural organizations. What people say about an organization is 12.85 times more important in driving an organization’s reputation than what the organization says about itself. Losing earned endorsement is not only a lost opportunity, it’s also a lost requirement to thrive in the long-term.

Lost endorsement bites cultural organizations in the booty on a number of occasions. It’s why organizations underestimate attendance loss during unexpected closures, and it’s why organizations need to actively buy back lost audiences at a higher price point after they cut the marketing budget.

A goal of smart visitor-serving organizations is to get visitors to leave abuzz with positive feedback to share with friends and family members about their experience – and with a willingness to share that positive feedback! Discounting interferes with this goal. And, in doing so, it makes achieving goals to educate and inspire more visitors all the more difficult.

Discounting decreases visitor satisfaction

Maybe these folks are also less likely to endorse a visit to an organization because they aren’t having as positive an experience as someone who paid full admission price in the first place!

Visitors who received complimentary admission reported overall satisfaction levels 8% lower than those who paid full-price. Again, people generally most value experiences for which they pay money!

Increasing satisfaction is a major goal for visitor-serving organizations looking to serve their constituencies…and that happens to be most of them.

Offer select, thoughtful promotions instead of discounts

Discounts and promotions are different. Select promotions may help overcome some of these negative effects if there’s a want to engage a specific audience segment. Promotions are targeted, selective opportunities to celebrate an audience. They make select audience members feel special. Discounts are offered to broad audiences – or to likely visitors in general.

But beware: A discount is not a promotion just because an organization calls it a promotion. To chalk this up as a matter of semantics – and to think it is solved simply by the jargon that we use internally (or externally) – is a big mistake. The lines that professionals draw within organizations don’t matter unless they are aligned with how the public views the situation. The difference between promotions and discounts is in how these “opportunities” are arranged, communicated, and perceived.

A “promotion” deployed as a discount functions as a discount. It causes problems. It doesn’t celebrate an audience – it celebrates thrift. It devalues an organization’s brand and its onsite experience. It’s not what you call “the deal,” so much as it’s how you execute it and what it makes the recipient feel that distinguishes a discount from a promotion.

Discounting for a quick hit attendance bump? Think twice.

Data suggest that discounting an organization’s admission price often does more long-term harm than short-term good. A better approach may be to ask yourself why you are discounting in the first place. Is it because your organization is confusing admission cost with affordable access programming? Is it because you are emphasizing inappropriate or arbitrary timeframes to staff (or the board) that emphasize short-term wins that may come at your organization’s long-term expense? Is it because you are confusing your organization’s superpowers and highlighting your organization as more of an attraction than a mission-based organization?

Market research, behavioral economics, and pricing psychology are on the side of cultural organizations adopting more thoughtful admission operations.

How long will it be before we cultural professionals learn that what our entities do is valuable and worthy of the investment of likely visitors? The hard work of cultural professionals elevates our communities, and the successes of cultural organizations even plays an important role in informing for-profit practices.

Let’s stop devaluing the great work of cultural organizations. Instead, let’s call upon intelligent strategies so that we can maximize revenues that enable programs that best serve our communities – and do this long into the future.